8-KRegulation FD

Energy Transfer LP 8-K Report, Regulation FD Disclosure (Nov 20, 2013)

Filed November 20, 2013For Securities:ETET-PI

Summary

Energy Transfer LP (ET) and Energy Transfer Equity (ETE) announced a significant transaction where ETE will acquire Trunkline LNG Company, LLC (TLNG) from ETP. TLNG owns a critical LNG regasification facility in Lake Charles, Louisiana. This acquisition is structured as an exchange, with ETP redeeming 18.71 million of its units held by ETE, effectively valuing TLNG at approximately $1 billion based on ETP's unit price as of November 18, 2013. The deal is expected to close in early February 2014 and will transform the Lake Charles terminal into a bi-directional facility, capable of both importing LNG and exporting liquefied natural gas via the developing Lake Charles LNG export project. This strategic move is anticipated to be immediately accretive to distributable cash flow per unit for both ETP and ETE starting in 2014 and is expected to be credit neutral. For ETP, this transaction further reduces its unit count and associated IDR obligations to ETE, strengthening its financial profile and positioning it for future growth. The combined regasification and liquefaction assets at Lake Charles are intended to serve as an ideal standalone entity for financing the Lake Charles LNG export project. Energy Transfer management planned to discuss this transaction and other growth initiatives at an investor conference on November 20, 2013.

Key Highlights

  • 1ETE to acquire Trunkline LNG Company, LLC (TLNG) from ETP for approximately $1 billion.
  • 2TLNG owns a 2.1 Bcf/day LNG regasification facility in Lake Charles, Louisiana, with long-term take-or-pay contracts through 2030.
  • 3Transaction transforms the Lake Charles terminal into a bi-directional facility for both LNG import and export.
  • 4Lake Charles LNG export project, co-owned by ETE and ETP, will leverage the terminal's capabilities.
  • 5Deal is expected to be immediately accretive to distributable cash flow per unit for ETP and ETE in 2014.
  • 6ETP unit count reduced by ~5%, decreasing IDR obligations to ETE.
  • 7Transaction approved by conflicts committees of both ETP and ETE boards.

Frequently Asked Questions

The primary purpose is to consolidate the LNG regasification facility (TLNG) with the developing LNG export project (Lake Charles LNG) under ETE's ownership, creating a strategic, bi-directional terminal and an ideal vehicle for financing the export project. This move is expected to enhance Energy Transfer's overall LNG capabilities and financial structure.

For ETP, the transaction results in the redemption of ETE's holdings of ETP units, reducing ETP's total unit count by approximately 5%. This directly lowers ETP's IDR (Incentive Distribution Rights) obligations to ETE, improving its financial profile and positioning it for future strategic growth. The transaction is also expected to be immediately accretive to ETP's distributable cash flow per unit.

The transaction is projected to be immediately accretive to distributable cash flow per unit for both ETE and ETP starting in 2014. It is also expected to be credit neutral for both entities, indicating no adverse impact on their credit ratings or financial leverage.

The transaction is anticipated to close in early February 2014, though it will be effective as of January 1, 2014. Operationally, it will convert the Lake Charles terminal into a bi-directional facility, allowing for both LNG imports and exports, which is crucial for the development of the Lake Charles LNG export project.